Government Weighs Delay in Youth Minimum Wage Increase
Plans to raise the minimum wage for young people to match adult rates could face a significant delay, according to reports from Sky News. The potential postponement stems from concerns that increased costs for employers might discourage hiring, potentially exacerbating youth unemployment.
Labour's Manifesto Commitment Under Review
In its 2024 election manifesto, the Labour Party pledged to eliminate age-based minimum wage bands, ensuring all adults receive equal pay. This commitment aimed to boost wages for hundreds of thousands of workers across the UK. However, Sky News understands that the government is now considering delaying this pledge, though it remains committed to eventual implementation.
Reports indicate that the hesitation is driven by fears that higher employment costs could deter firms from hiring young workers, worsening youth unemployment. Recent data underscores the urgency: the UK's overall unemployment rate rose to 5.2% in October to December last year, the highest in nearly five years. For 16 to 24-year-olds, the rate reached 16.1%, the highest level since early 2015, with almost 950,000 individuals in this age group not in employment, education, or training in July to September last year.
Industry and Union Reactions
Prime Minister Sir Keir Starmer, speaking in Cardiff, reaffirmed the government's commitment to equalizing the youth minimum wage. However, businesses, particularly in sectors like hospitality that frequently hire young people, express concerns. They cite measures such as increased employer National Insurance contributions as making hiring more expensive and risky.
Tina McKenzie, Chair of the Federation of Small Businesses, warned Sky News: "If the government thinks small employers can handle increased costs, along with the minimum wage hike, then good luck. Realize that if you continue to raise employment costs and make hiring young people more difficult, small employers will simply hire fewer young people."
Unions, however, have cautioned against "scaremongering" over the delay. Paul Nowak, General Secretary of the TUC, stated: "Youth unemployment is an urgent issue that deserves real solutions, like an ambitious jobs guarantee and ending insecure employment, not more fearmongering about the minimum wage. Young workers have bills to pay too, and they deserve a fair rate for the job. The government must stick to its target on scrapping age-based pay rates."
Government Response and Current Wage Rates
Chancellor Rachel Reeves, when questioned by reporters in south London, avoided directly confirming the commitment. She highlighted existing incentives for hiring young people, such as the apprenticeship minimum wage rate and no National Insurance contributions for the youngest workers. Reeves emphasized the government's determination to support young people through policies like increased apprenticeship places.
Currently, the minimum wage for workers aged 18 to 20 is £10 per hour, set to rise to £10.85 in April. In contrast, the national living wage for workers aged 21 and over is £12.21 per hour, increasing to £12.71. This disparity highlights the ongoing debate over fair pay and employment opportunities for young adults in the UK.
